It tests your defense against random attackers, in the same way that a fence keeps random people off your lawn.
But it doesn't tell you anything about dedicated attackers, and those are the guys you really need to worry about. Anyone who really wants in can climb over the fence, or cut through it, or drive a tank over it.
I'm not a fan of this type of bounty myself, but it might seem like a good idea if you have enough money for a contest prize but not anywhere near what would be needed for a professional audit. Even so, if your bounty is claimed, you still might want to know how much of the work for that first attack is reusable for all subsequent attacks, and that requires a second prize.
But it doesn't tell you anything about dedicated attackers, and those are the guys you really need to worry about. Anyone who really wants in can climb over the fence, or cut through it, or drive a tank over it.
I'm not a fan of this type of bounty myself, but it might seem like a good idea if you have enough money for a contest prize but not anywhere near what would be needed for a professional audit. Even so, if your bounty is claimed, you still might want to know how much of the work for that first attack is reusable for all subsequent attacks, and that requires a second prize.